As the spread of the coronavirus accelerates in the U.S., the economic impact is just starting to be felt. A startup’s best-laid plans for the year have been scrambled. But the impact on your startup is going to be unclear.
The video conferencing company Zoom will likely benefit in the short term because of the boom in people working from home. Retail will likely suffer in the coming weeks as consumers avoid stores and malls.
When things are so unpredictable, you need an early warning system that will alert you when key metrics start to change for the worse.
Now more than ever, pay attention to the KPIs tied to your sales funnel.
Top of the Funnel
At the top of the funnel, watch for a drop off in awareness building KPIs.
- Fewer visitors to your site
- Less foot traffic in your stores
- Fewer initial sales calls
- Fewer RFPs
- Falling metrics from your inside sales team.
These kinds of metrics are leading indicators to a fall-off in demand. Lower volume at the top of the funnel will lead to lower sales volume, but it can take some time for you to see that result in your numbers. Watch the top of your sales funnel very carefully.
Middle of the Funnel
In the middle of your sales funnel, watch for a decrease in customer engagement.
- Fewer pages per visit on your e-commerce site
- Higher bounce rates
- Longer periods of time between meetings with potential sales clients as they slow roll discussions
The middle of the funnel is where everyone becomes a tire kicker, as they wait to see what happens in the macroeconomy before they make a purchase decision.
Changes in behavior to the middle of the funnel can be the hardest to spot over short periods of time. You see a lot of strong inbound activity. Everyone looks busy. Meetings are getting scheduled, but they are just a few weeks further out than you would like. Site visits are strong, but page views per visit are slightly lower.
Small moves here can indicate much bigger potential problems, so look closely and look often.
Bottom of the Funnel
At the bottom of your funnel watch for either the drop off in conversions or lower average order value. You might see your customers pull back entirely. Or they might just get more cautious and spend less. Either way, you’ll feel the impact on your bottom line and cash flow.
Pay Attention to Existing Customer Metrics
Watch for fall off in repeat buyer behavior. Keep an eye out for subscription cancellations and longer periods between repeat purchases. You should have a strong handle on your retention metrics so you can see these shifts.
Update Your Reporting Dashboards Now
Moments like these are why it’s so critical that you understand the KPIs that drive your business, and that you have the ability to report on them in real-time. You should be holding weekly business reviews with your team to catch shifts quickly so that you can respond. Your daily reporting should be a health check on your business that can signal when key metrics are falling off.
If you don’t have a handle on your sales funnel KPI’s, you need to get your team focused on putting that reporting in place ASAP. The impact of the coronavirus is going to move fast. Your window to respond and get your startup ready is already closing.
Finally, start forecasting for downside scenarios. Watch your cash runway. Prepare to make hard decisions to extend your runway and get through the next few months.
We are in uncharted territory. It’s ok to be uncertain as to what to do. There is no playbook. The best you can do is hope for the best, prepare for the worst, and pay close attention to what’s happening each day.